If zoning can reduce the value of a particular piece of property, then how could the lack of zoning produce the same result?

A lack of zoning can reduce the value of a certain piece of property by creating a situation in which that piece of property ends up being next to some sort of land use that reduces the value of the property.

Let us say that you have built a house on a certain lot that is surrounded at this point by vacant land. If there were zoning ordinances, that land around you would probably also be zoned for single-family residential use. At the very least, you would know what the zoning was and what sorts of land uses could end up next door to you.

But now imagine that there is no zoning in your town. That means that anyone who buys the land next to yours can do whatever they want with it. They can put a feed lot with a large number of cows there. They could have a slaughterhouse next door to you. They could, if there is enough land, build a Wal-Mart. Any of those uses of the land could reduce your property value because other people are not likely to want to live near those sorts of things.

In short, zoning ordinances protect your property value by ensuring that only certain kinds of uses can be made of the land next to yours.